Black Gold, Bitcoin and Bonds Bounce as Dollar Dips Past the ‘Blue Wave’ Bête Noire
Oil prices made all the headlines today as the Saudis agreed (in a somewhat desperate move) to allow Russia (and Kazakhstan) to modestly increase their production while reducing production of a narcotic 1 mm b / d (to its lowest since 2020). This surprise sent WTI above $ 50 for the first time since February…
Did Russia just drink Saudi milkshake ?
We are convinced that the shale drillers are also delighted…
The ISM hit its highest level since August 2018 but, as we detailed earlier, this was very misleading as supplier delivery times are increasing due to supply chain disruption, not demand… as export orders decline…
Chances of a “blue wave” have decreased slightly today …
Crypto also surged on this day, stretching ETH’s YTD gains to nearly 50% and BTC up 16%…
With Bitco in back above $ 34k…
Ethereum has also gone up above $ 1,100…
Forwards contracts just couldn’t hold an offer, but as soon as the spot market opened, a sudden buying jerk ensued. This continued modestly, then at 1400ET, stocks took another higher step (no obvious catalyst) which pushed the S&P (along with small caps and the Dow) into the green for 2021… The rest of the day was a battle to keep that green shutdown in 2021 – which they lost as all the majors ended the day in red again for 2021…
There does not appear to be any differential in the markets at this time (value and growth both up and down). We always have the impression of rebalancing the entries at the beginning of the year…
Energy stocks surged (as oil gained) with Staples and Utes the laggards…
The Fed’s Bostick chatterbox helped trigger the upward movement in bond yields (long-end around 4-5 basis points)…
But, as we noted earlier, 10Y remains in a very tight range…
The curve steepened with 5s30s to four-year highs…
The dollar continues its inexorable slide…
Close at its lowest since February 20 18 (less than a tick or two after breaking this critical media)…
Yuan grabbed the headlines by entering the devaluation danger zone…
And overnight, a sudden peak subsided as Bloomberg reported that some major Chinese state banks actively offloaded the currency against the greenback after the yuan hit 6.43 , according to five traders who asked not to be identified because they were not allowed to comment on the market. While lenders could take profits on long yuan positions, they could also act on behalf of the authorities to dampen appreciation.
Gold futures rose above $ 1950, wiping out almost all post-vaccine losses…
Meanwhile, Silver barrels are way above pre-vaccine highs…
And so the Gold / Silver ratio has limped lower …
The copper hit 7-year highs…
Also worth noting amid talk of devaluation of China that the yuan (against gold) has weakened to pre-June drop levels…
Finally, is the “flu” season almost over?
What do gold and bitcoin say about the future of the dollar against fiat…
Source: Bloomberg